HomeKnow-HowA short introduction to the increasingly popular OKR goal management method (Part...

A short introduction to the increasingly popular OKR goal management method (Part 1 of 2)

In this two article series, I’ll lay out the requirements and what you need to do as homework for establishing the OKR (Objectives Key-Results) method in your company, and give some practical advice for how to optimally implement it in your organization.

The OKR method is very simple in theory. It paves a path for how to get to objectives (O), and how reaching these objectives will be measured (Key Results). The OKR framework can be described as a set of interconnected individual or group goals that, once reached, enable the company to attain its global strategic goals.

The method consists of lists with 3 to 5 high level objectives and for each of these, there are 3 to 5 measurable results. Each of the results have a point range measured from 0 to 100% or from 0 to 1, demonstrating its level of completion.

The objectives are kept public so that people and team move towards the same objectives and know what others are focusing on.

After determining the global objectives of the company, one must set up the OKRs for the internal teams and individuals. Your team should understand that 60% of the OKRs must be selected and defined by your employees and 40% by leadership. Each area should suggest its OKRs by answering the question: how can we support the company on its path to accomplish its global strategic goals? For each employee, 3 to 5 OKRs should be defined and agreed upon.

“The objective is what I want to have accomplished,” said John Doerr, who introduced the system to Google. “The key results are how I’m going to get it done. The objectives are typically longer lived. They’re bold and aspirational. The key results are aggressive, but always measurable, time-bound, and limited in number.”

In order to be successful with the goal management framework and to establish the OKR program in your company, there are some criteria to be met. If your startup meets the 6 points listed below, then you are ready to go to the next level and launch your OKR framework.

1. Your mission is ambitious and clear

Before you initiate an OKR framework in your company, you should have a clear vision of what your startup does, as the OKR method supports companies to achieve their ambitions when they are clear and well defined.

It’s not an easy system to implement and maintain, but it will certainly help individuals, teams and leaders to focus on the tasks and work that will take your organization to the goals you choose.

Combining your company’s mission (or purpose) with where your want to be (or vision) is easier when transforming the steps to it into a measurable, ultimate OKR, as that will serve as a compass for all work done in the organization. Whether it is growing revenue, enhancing your product portfolio, or increasing profit margins, the framework has been celebrated by the likes of Intel and Google, with companies using OKRs since its creation by the now venture capitalist John Doerr, author of the book Measure What Matters.

2. You will commit part of your team’s time and efforts to make the OKR program run smoothly

If a company doesn’t derive value from OKR, it’s most likely due to a lack of commitment of time and resources. OKR is a process of recurring learning, iteration and interaction, sometimes taking up to one year before the company sees any result of added value on having established OKR.

Implementing OKR demands time, commitment, and patience from all stakeholders.

3. OKR is a true aspiration of the leadership team

The startup founders need to promote the OKR within the company so that it turns out a success. Selection of company Objectives need to be prudent and accurate – and the founders and directors should be setting them.

Credibility and legitimacy for the program will come from listening to the employees, who should be responsible for 60% of the OKRs, and having that endorsed and completed by the board of directors.

4. You and your team are ready for transparency

Many employees, shareholders and managers want more transparency in their companies, but most of them do not know what it means. Transparency brings a big cultural shift to most organizations as leadership must disclose some key performance indicators (KPIs). However, knowing those indicators makes employees more engaged, and helps them to feel more of a part of the company as opposed to when there is no transparency policy.

Would you be uncomfortable or disturbed to share revenue, net profit margin, market share indicators and other KPIs with your whole team? OKRs call for that level of disclosure. Otherwise you will not incentivize individuals and teams in he direction of common objectives and goals.

5. You have already identified a person in your team who can manage the OKR program

As mentioned before, starting and maintaining an OKR program demands time and effort on different levels – from leadership, teams, and individuals. Every new process requires people to take care of it and the mandatory requirement is to have an OKR facilitator or organizer.

This individual will push for the OKR framework to be truly understood by everyone and for the OKR to be accessible and updated in a recurring fashion on programmed timeline, so that all teams and individuals know about the progress of each other and there is a communication flow on a regular basis, a key for more transparent processes.

6. Your startup and groups often track KPIs

You won’t be able to set targets and goals for your teams and individuals if you don’t have a good tracking process. If the measurements of Key Performance Metrics (KPIs) are not in place and at work, it will become very difficult to select and stick with target Key Results, and to measure how your Key Results have changed in relation to a comparative benchmark.

A notable and positive side effect of OKR framework implementation is that it forces you to think about how to measure advancements and success. In practical terms, this means that we have to search frequently for new ways to measure metrics in order to support teams and individuals to perform well and reach their Objectives.

To be continued…

Bernardo Arnaud
Bernardo Arnaud
Bernardo lives in Vienna and has been consulting and advising companies for 18 years in fintech, commodities trading, telecom assets management, messaging, jobs marketplaces, agribusiness, luxury, e-commerce and SaaS. He founded a few companies throughout his entrepreneurial journey.

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